State Business Leaders Predict Slower Growth

November 28, 1988

While Illinois business leaders are generally optimistic about the outlook for 1989, many anticipate a slowdown in growth, a survey of the 68-member board of directors of the Illinois State Chamber of Commerce showed.

Most of the business leaders surveyed projected national growth rates around 2 to 3 percent next year, with employment and inflation remaining about at current levels.

``Bright spots include both basic manufacturing, which enjoys increased exports due to the dollar`s condition, and the information industries that serve it,`` said Jay R. Vonachen, president of Vonachen Industrial Supplies Inc. in Peoria and this year`s chairman of the state chamber.

``Although there may be some softening in housing construction due to interest rate uncertainty, we see no recession on the horizon,`` he said.

Major manufacturers are projecting slower but steady growth. ``We`re cautiously optimistic about 1989 prospects,`` said Byron DeHaan, director of public affairs at Caterpillar Inc. in Peoria. ``Although the world economy is complex and volatile, we don`t think there will be a recession. Worldwide economic growth should continue, but at a slower pace.``

Continued health in the manufacturing sector bodes well for the Midwest and Illinois, said Eugene L. Simpson, vice president of Motorola Inc. in Schaumburg.

``Depreciation of the U.S. dollar has returned a competitive advantage to Midwestern manufacturers,`` he said. ``Declining energy prices have reduced costs of production in the region and improved terms of trade with the rest of the country and the world.``

However, some industries are feeling the pinch of slower growth. ``Total U.S. oil demand in 1989 is forecast to increase approximately 2 percent and gasoline demand by 1 percent,`` said Robert D. McKeehan, general manager of marketing for Amoco Oil Co. ``Within Illinois, total oil and gasoline demand are both expected to grow less rapidly than the U.S. average.``

``It is generally felt that in the construction materials business, a general slowdown will occur in 1989 after several years of good, solid growth,`` said John E. Palda, vice president of Material Service Corp.

The health-care industry, one sector whose growth in recent years transcends business cycles and all efforts by other industries to stop it, can expect another robust year in 1989.

``Health-care costs continued their double-digit escalation throughout 1987 and the first three quarters of 1988,`` reported Theodore E. Desch, vice president for corporate affairs at Blue Cross and Blue Shield of Illinois.

``Americans simply want to be healthy, and they are showing no willingness to compromise when it comes to diagnostic and treatment procedures.``